THE PRESIDENT: Thank you, Secretary
Evans. And thank you all very much. It's an honor
to be back here. It's a pleasure to see so many students
here today. I understand some of you took a tour of the
White House. You must have behaved well, because I didn't
hear the dogs barking. (Laughter.) I hope you enjoyed being
there as much as Laura and I enjoy being there. It's a
fabulous place, the White House is. I'm so glad you were
able to see it.

I'm also pleased to be back to congratulate the award winners of
the Malcolm Baldrige National Quality Award. I'm really
pleased that school districts have been added. I want to
commend the Baldrige Committee for including
education. Secretary Rod Paige is
here -- both of us believe so strongly that no
child should be left behind. Both of us know the potential
of the public school systems in America, and we want to thank and
congratulate the school districts here that have set the highest of
high standards not only at the secondary level, but also at the high
level of education.

I was privileged to know Malcolm Baldrige. He was one of
America's most distinguished Secretaries of Commerce. And
what a fine and honorable man he was. The award that bears
his name reflects the virtues that he brought to public service and how
he lived in his private life, a commitment to excellence, shrewd
judgment and sound judgment, principled leadership, integrity, and a
sense of responsibility.

Today's honorees have met a rigorous test, and such a worthy
example for others. And I know Malcolm would have approved
of the winners.

It's a great honor to be with Midge Baldrige
again -- you're looking pretty darn good these
days. (Laughter.) And Letitia Baldrige, as well.
I know we've got some members of the United States Congress
here -- I think Bill Jenkins from Tennessee is
here. I know Connie Morella is here. Thank you for coming,
Connie. I also appreciate Nancy Murkowski, the wife of Frank
Murkowski. Nancy is committed to quality education in the
state of Alaska, and I know you're as proud as I am for the winners who
are here. (Applause.) And I always want to thank the U.S.
Army Band for providing such wonderful music. (Applause.)

I appreciate the fact that prior winners of the Baldrige Award are
here. I think it's important for you to stay involved in the
process. As you heard, some of the recipients also
appreciate of you being here. And I want to welcome five
more organizations to your ranks. (Applause.) The
school districts; the University of Wisconsin-Stout; as well as the
fine symbols of entrepreneurial spirit in America, Pal's Sudden Service
of Tennessee, and of course, Clarke American Checks, represented by
some rowdy Texans. (Applause.)

This is a high, high honor. I know you all understand
what a big deal this is, having gone through the process. It
is an important award, and I congratulate you all so very
much. The award goes to organizations rather than any single
individual. And that's important to note. As
we've seen today, success happens in an atmosphere of teamwork, common
values, and trust.

An organization needs a good idea and a good product or a good
service. It certainly needs a good strategic
plan. But more than anything, it needs good
people -- men and women of integrity, who
understand their duties to each other and to the public interest.

And this is true throughout our entire economy. The free
enterprise system draws upon the best in people: creativity,
ingenuity, energy, a desire to make life better for ourselves and for
others. The whole design of free market capitalism depends
upon free people acting responsibly. Business people must answer not
just to the demands of the market or self-interest, but to the demands
of conscience.

The bottom line of the balance sheet defines a business's goal, but
not the sum of responsibilities of its leaders. Management
should respect workers. A firm should be loyal to the
community, mindful of the environment.

In America, by far -- by
far -- most businesses fulfill their
responsibilities. They do not cut ethical corners, or
neglect workers, or disregard community standards. A good
business finds opportunities and makes the most of them. And
a good business always respects the boundaries of right and wrong.

In our country, the law defines many of these responsibilities,
from workplace safety to environmental protection. For
publicly-held corporations the law goes further, defining standards of
disclosure with independent certification by auditing firms.

We have seen lately just how important these standards are, and the
harm that can follow when they are ignored. Exactly where
the blame lies may take a long time to determine, and legal judgments
are for regulators and for courts. But this much is
clear: To properly inform shareholders and the investing
public we must adopt better standards of disclosure and accounting
practices for all of corporate America.

The reason that a single bankruptcy can cause so much concern in
America is that more Americans than ever have invested their money in
public corporations. Today, about 80 million Americans own
stock, either individually or through their pension
plans. This is one of the causes for the expansion in
personal wealth over the past 20 years. This has been an
incredibly positive development for America. Stock ownership
allows citizens from all walks of life to own a part of the economy and
to share in its growth. The people who run public companies
owe a special obligation to these investors, many of whom have put
their savings and future security on the line.

Corporate officers must perform their duty in good faith to the
best of their abilities. They must disclose relevant facts
to the investing public, and they must focus on the interests of
shareholders who are the real owners of any publicly-held enterprise.

I recognize that the basic rules of corporate law are made by the
states, and that's as it should be. But Washington has
responsibilities, as well. The buying and selling of
publicly- held shares is regulated by the federal
government. And today, I call upon the Securities and
Exchange Commission to take action. Existing regulations should be
clearer; penalties for wrongdoing should be tougher. Reform
should improve investor confidence and help our economy to flourish and
grow.

It is important to provide sound regulation and remedies where
needed, without inviting a rush of new lawsuits that exploit new
problems instead of solving them. Our goal is better rules
so that conflict, suspicion and broken faith can be avoided in the
first place.

Reform should begin with accountability, and reform should start at
the top. The chief executive officer has a daily duty to
oversee the entire enterprise, the entire firm, and therefore, bears a
unique responsibility for serving shareholder interests.

Currently, a CEO signs a nominal certification of annual financial
statements, and does so merely in its capacity on behalf of the
company. In the future, the CEO's signature should also be his
personal certification, vouching for the voracity and fairness of the
financial disclosures. When he signs a statement, he's
giving his word, and should stand behind it.

Oftentimes businesses base executive bonuses on financial
statements. If, however, a financial statement turns out to be grossly
inaccurate, or the result of serious misconduct, those bonuses should
be returned to the company's treasury on behalf of it's
shareholders. (Applause.)

Corporate officers should not be allowed to secretly trade their
company's stock. Every time they buy or sell, they should be
required to tell the public within two
days. (Applause.) The Securities and Exchange
Commission should be able to punish corporate leaders who clearly abuse
their powers, by banning them from ever serving again as officers or
directors of publicly held corporations. (Applause.)

We must also do more to safeguard the rights of
investors. America has the best system of corporate
disclosure. Yet, the interests of the average investor are
sometimes overlooked, especially the need for thorough and timely
information about firm performance. And some corporations
have used artful and intricate financial arrangements to hide the true
risks of the investment.

We need to get back to basic capitalism. In a system
based on the willingness to take risks, investors need to know the true
nature of the risks. The investor has the right to a true
and fair picture of assets, liabilities and
income. Management has a good-faith obligation to provide
that information, attracting investment by building on strengths, not
by clever concealment of weaknesses.

And to further ensure that information is reliable, we will need
reforms within the accounting profession. Auditors are a
critical external check on management, and we must ensure that the
integrity of their work is never compromised. Accounting is
one of the most and one of the most respected professions in our
country, and it can help protect its own integrity by developing and
enforcing clear standards of conduct.

The profession also needs an independent regulatory board to hold
accounting firms to the highest ethical standards. And the
SEC should exercise more effective and broad oversight of accounting
standards. The SEC should also do more to guard against
conflicts of interest, requiring, for example, that an external auditor
not be permitted to provide internal audits to the same
client. (Applause.)

And, finally, auditors should do more than evaluate a company by
minimum standards. Instead, the auditors should compare the
company's financial controls to the best industry practices and give
those findings to the audit committee.

You know, we're passing through extraordinary times here in
America. We fight a war, a real war, to protect our homeland by
bringing terrorists to justice. We stand strong against evil
abroad -- I mean we are standing strong and
determined and united against
evil. (Applause.) We're finding strength at home
through the gathering momentum of millions of acts of kindness and
generosity and goodness, neighbors helping neighbors, Americans
adhering to the age-old call to love someone just like you'd like to be
loved yourself.

America is ushering in a responsibility era; a culture regaining a
sense of personal responsibility, where each of us understands we're
responsible for the decisions we make in
life. (Applause.) And this new culture must
include a renewed sense of corporate responsibility. If you
lead a corporation, you have a responsibility to serve your
shareholders, to be honest with your employees. You have a
responsibility to obey the law and to tell the
truth. (Applause.)

Business relationships, like all human relationships, are built on
a foundation of integrity and trust. When those values are
practiced and expected, our economy and our country are stronger.

We're seeing some challenges and some changes in American business
and American enterprise. Yet this annual presentation is a
reminder of things that must never change: the passion for
excellence, the drive to innovate, the hard work that goes with any
successful enterprise, the need to be open, the call for
integrity. This year's Baldrige Award winners have shown
these qualities, and have taken their place in a distinguished line of
leaders.

Once again, my congratulations to you all. May God bless
your enterprises, and may God bless America.